Football season is in full swing, and here in the nation’s capital, the home of the Washington Commanders has a new name: Northwest Stadium, the moniker of Virginia-based Northwest Federal Credit Union, which recently inked a multi-year, multi-million-dollar stadium naming deal.
If you’re wondering how a credit union — a nonprofit, tax-exempt entity — can afford such a hefty marketing spend, you’d be asking the right question. When Congress passed the Federal Credit Union Act authorizing the creation of federal credit unions, its intention was for these institutions to serve people of modest means within clearly defined communities united by a common bond.
But times have changed. Today, many credit unions — in pursuit of endless growth — have dramatically expanded their fields of membership. Northwest — whose marketing budget ballooned by 88% from 2022 to 2023 — was founded in 1947 to serve CIA employees. It now offers membership through multiple federal agencies, as well as “hundreds of businesses and community organizations.”
Northwest isn’t the only credit union spending top-dollar on marketing to grow membership far beyond its original scope. In fact, several of the largest credit unions now purport their potential membership base to be upwards of 330 million Americans — effectively the entire population of the United States.
If credit unions are now empowered to cast a net this wide and compete aggressively for market share with taxpaying institutions, it’s time for policymakers to stop punting the ball on ensuring that these institutions are accountable and transparent in their operations.
ABA expressed this view in a recent letter to NCUA Chairman Todd Harper — who has himself questioned whether credit unions should be spending so much on stadium naming deals, when those funds could be better spent supporting members. Read the full letter at https://www.aba.com/advocacy/policy-analysis/letter-to-ncua-on-credit-union-transparency. In addition, there have been several positive policy developments in recent days that suggest a growing appetite in Washington for greater accountability and transparency for the $2.3 trillion credit union industry.
One example: In a recent policy statement, the FDIC signaled that it would begin requiring credit unions to provide additional information when applying to acquire an FDIC-insured bank. Credit unions have targeted a total of more than $9 billion in bank assets so far this year, with 18 deals announced in 2024 alone. ABA remains deeply concerned about the increasing number of these types of transactions and the potential tax losses and effects on local communities that accompany them. Regulators should rightfully scrutinize these deals, given that credit unions are not subject to any federal Community Reinvestment Act requirements.
Greater accountability is also expected through an upcoming rulemaking on executive compensation transparency from the National Credit Union Administration that would require the disclosure of certain financial information by federal credit unions. Given that credit unions are democratically controlled financial cooperatives, it is essential that their member-owners have greater visibility into how top executives are incentivized relative to these transactions.
Regulators are not the only ones taking note — in fact, in just the past year, a total of 80 members of Congress have publicly questioned credit union activities.
Taking all these developments into consideration, it seems the time is right to move the chains on credit union accountability. You can count on ABA to continue playing offense on these issues in the months ahead.
Email Rob at nichols@aba.com.
